Income protection and life insurance answer different questions. Life insurance pays a lump sum to your family if you die; income protection pays an ongoing benefit to you while you’re alive but unable to earn. Most people building a financial protection plan look at both together. One covers the household if the worst happens and the other covers it if income simply stops for a period.

Sick leave usually covers short absences, but it can run out well before a serious illness or injury resolves. Income protection is generally structured to start after a waiting period and continue for months or years beyond that, covering the gap once employer-paid leave is exhausted.

No. Income protection responds to illness or injury that stops you working, not to redundancy, business closure or resigning. Cover for job loss is a different type of insurance and isn’t part of a standard income protection policy.

Many policies allow the waiting period or benefit period to be reviewed and adjusted over time, though this depends on the insurer and the specific policy. It’s worth revisiting these policy terms periodically as circumstances change, such as building up savings or taking on new financial commitments.

Income protection pays an ongoing benefit while you’re temporarily or long-term unable to work due to illness or injury. TPD (Total and Permanent Disability) insurance pays a single lump sum, and only once an illness or injury is assessed as permanent. The two are often held together rather than as alternatives to each other.

Premiums for income protection cover held outside superannuation are generally tax deductible for many people, though this depends on individual circumstances. A registered tax agent or accountant can confirm how this applies to you.